Ris­ing dol­lar value of tex­tile ex­ports

The Pak Banker - - 4editorial - Nasir Ja­mal

THE in­crease in cot­ton and yarn prices are be­gin­ning to show in the ris­ing dol­lar value of tex­tile ex­ports, which rose 23.65 per cent to $4.107 bil­lion in the first four months of the cur­rent fi­nan­cial year from $3.321 bil­lion a year ago. The ex­port num­bers re­leased by the Fed­eral Bureau of Statis­tics in­di­cate that ex­port of all value-added tex­tile prod­ucts - knitwear, bed-wear, tow­els, ready­made gar­ments, tex­tile made-ups, etc - had reg­is­tered growth this year. Knitwear grew by 21.39 per cent to $754 mil­lion from $621 mil­lion a year ago. Ex­ports of bed-wear, tow­els and ready­made gar­ments grew by 15, 14, and 38 per cent dur­ing the first four months.

The tex­tile ex­ports dur­ing the first quar­ter of the cur­rent fi­nan­cial year to Septem­ber had in­creased by 21 per cent to $2.92 bil­lion from $2.42 bil­lion a year ear­lier. The ex­port data for the quar­ter show that the unit price of all the tex­tile prod­ucts save knitwear and tow­els had in­creased. It means that the knitwear and towel mak­ers had to ex­port more quan­ti­ties than the rest of the value-added tex­tiles for show­ing growth in their sales abroad in terms of dol­lars.

All Pak­istan Tex­tile Mills As­so­ci­a­tion (Aptma) chair­man Go­har Ejaz said the in­crease in the dol­lar value of the ex­ports owed a lot to free trade poli­cies in the tex­tile sec­tor.

"The in­dus­try, par­tic­u­larly an­cil­lary tex­tile in­dus­try, has suc­cess­fully - though only par­tially - trans­ferred the re­cent hike in the raw ma­te­rial prices on the back of es­ca­lat­ing global cot­ton prices to for­eign buy­ers," he said. He was hope­ful of the tex­tile ex­ports ris­ing to $15 bil­lion dur­ing the cur­rent fis­cal from around $10 bil­lion pro­vided the in­dus­try, es­pe­cially the val­ueadded in­dus­try, could trans­fer the in­crease in cot­ton and yarn rates to the buy­ers. The cur­rent fis­cal's tex­tile ex­ports are pro­jected to grow to $10.64 bil­lion from $10.244 bil­lion last fi­nan­cial year.

Ex­porters of the value-added tex­tile prod­ucts though ad­mit that their buy­ers had started to fac­tor in the re­cent es­ca­la­tion in cot­ton and yarn prices, they in­sist that the in­crease in their prices was not com­men­su­rate with the rise in their raw ma­te­rial prices and the cost of do­ing busi­ness.

"The for­eign buy­ers have started to com­pen­sate us for the spike in the yarn prices. The hike is not enough," Ijaz Khokhar, chair­man of the Pak­istan Ready­made Gar­ments Man­u­fac­tur­ers and Ex­porters As­so­ci­a­tion (PRGMEA), told dawn.

He said the buy­ers also could not ab­sorb the to­tal in­crease in raw ma­te­rial prices be­cause they could not hike their re­tail prices be­yond a cer­tain level. "In spite of the in­creased unit prices of tex­tile ex­ports, we are los­ing money on ac­count of more than dou­bling of raw ma­te­rial rates and short­ages of power and gas," he said.

Global cot­ton prices have more than dou­bled to $1.39 a pound. The year's av­er­age is fore­cast to be around $0.92 a pound. "While cot­ton mar­ket re­mains volatile, our buy­ers have given us a cush­ion of only five to 10 per cent," Khokhar said.

Many are hope­ful that the ex­ist­ing trend of in­crease in dol­lar value of tex­tile ex­ports will con­tinue to grow in the months to come. Some are not.

Aziz-ur-Rehman, a lead­ing ex­porter from Karachi, dis­missed the in­crease in tex­tile ex­ports as unim­por­tant. "Does this in­crease in our tex­tile ex­ports show that we have in­creased our out­put and quan­tity of our ex­ports? Do the num­bers show that we have grabbed a big­ger share in the world tex­tile trade? The cur­rent hike in the tex­tile ex­ports in dol­lar value owes to the higher raw ma­te­rial costs. There's noth­ing to boast about," he said.

He said the es­ca­la­tion in the cost of do­ing busi­ness on the back of ris­ing in­ter­est rates and util­ity rates and the price of the raw ma­te­ri­als for the value-added tex­tile meant that the in­dus­try's prof­itabil­ity had squeesed sub­stan­tially. "Pak­istan is at the bot­tom of the list of the for­eign buy­ers. If they could they would not do busi­ness with Pak­istan be­cause of our coun­try per­cep­tion," he said.

A knitwear ex­porter from La­hore said the value-added sec­tor was not get­ting de­cent re­turns (on ex­ports). "If the cur­rent trend of ris­ing yarn prices con­tin­ues and the prices of the value-added tex­tile prod­ucts do not in­crease by 20-25 per cent the ex­porters will stop procur­ing yarn, re­sult­ing in the col­lapse of the do­mes­tic yarn mar­ket," he said.

Khokhar said, the yarn mar­ket would re­main volatile as long as the "govern­ment did not frame an eq­ui­table pol­icy for the en­tire tex­tile chain." In or­der to sta­bilise the do­mes­tic yarn mar­ket and dis­cour­age price spec­u­la­tion, he sug­gested, the govern­ment should tell the yarn pro­duc­ers not to sell their prod­uct to in­vestors. Only reg­is­tered buy­ers should be al­lowed to pur­chase yarn, he said.

In the mean­while, many spin­ners fear that the an­cil­lary tex­tile sec­tor had again be­come ac­tive to get some sort of re­stric­tion im­posed on yarn ex­ports by rais­ing false alarm about its avail­abil­ity in the do­mes­tic mar­ket to force down its prices.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.